The CBIC has issued Notification No 18/2022 – Central Tax dated 28th September, 2022 bringing into effect provisions of Finance Act, 2022 with effect from 1st October, 2022. The provisions of sections 100 to 114, except clause (c) of section110 and section 111, of the said Act shall come into force w.e.f. 1st October, 2022.

Detailed changes in GST Laws Pursuant to giving effect to the provisions of The Finance Act, 2022 is presented below –

1. Input Tax Credit (Section 16(2)(ba) of the CGST Act, 2017)

A. Restriction in availing Input Tax Credit – w.e.f. 01-10-2022

Insertion of a new sub clause (ba) in Section 16(2) of the CGST Act, 2017 (“CGST Act”) to provide that input tax credit with respect to a supply can be availed only if such credit has not been restricted in the details communicated to the taxpayer under section 38. [Clause 100 of Finance Act, 2022].

B. Extension of Time limit to avail Input Tax Credit – w.e.f. 01-10-2022

Further, sub-section (4) of section 16 of the CGST Act has been amended to provide for an extended time for availment of input tax credit by a registered person in respect of any invoice or debit note pertaining to a financial year upto 30th (thirtieth) day of November of the following financial year. [Clause 100 of Finance Act, 2022].

Earlier the due date for availment of Input Tax Credit due date of furnishing of the return under section 39 for the month of September following the end of financial year to which such invoice or debit note pertains or furnishing of the relevant annual return, whichever is earlier

Comment – Time period for claiming ITC has been extended to 30th November of the following financial year.

2. Cancellation or suspension of registration - w.e.f. 01-10-2022 - [Clause 101 of Finance Act, 2022]

Sect 29 Clause (b) and (c) of sub-section (2) of section 29 of the CGST Act is amended so as to provide that the registration of a person is liable for cancellation, where

A. Composition Scheme – Sec 29(2)(b)

a person paying tax under section 10 has not furnished the return for a financial year beyond three months from the due date of furnishing of the said return (Earlier the said period was returns for three consecutive tax periods);

B. Other than composition Scheme – Sec 29(2)(c)

a person, other than those paying tax under section 10, has not furnished returns for such continuous tax period as may be prescribed (Earlier the said period was continuous period of 6 months)

Comment – Anomaly in non-filing of returns by Composition taxpayer has been removed by this amendment and provision has been now aligned with Annual filing of Return in Form – GSTR 4.

3. Credit and debit notes (Section 34 of the CSGT Act, 2017) - w.e.f. 01-10-2022 - [Clause 102 of Finance Act, 2022]

Sub-section (2) of section 34 of the CGST Act is amended to provide for an extended time for issuance of credit notes in respect of any supply made in a financial year upto 30th (thirtieth) day of November of the following financial year.

Earlier the date allowed for issuance of Credit Notes was due date of furnishing of the return under section 39 for the month of September following the end of financial year to which such invoice or debit note pertains or furnishing of the relevant annual return, whichever is earlier. Now the same has been extended to 30th Nov of the following financial year or filing of Annual Return, whichever is earlier.

4. Furnishing details of outward supplies (Sec 37 of the CGST Act, 2017) w.e.f. 01-10-2022 - [Clause 103 of Finance Act, 2022]

Section 37 of the CGST Act is amended so as to:

a) provide for prescribing conditions and restrictions for furnishing the details of outward supply and for communication of the details of such outward supplies to concerned recipients;

b) do away with two-way communication process in return filing;

c) provide for an extended time upto thirtieth day of November of the following financial year for rectification of errors in respect of details of outward supplies furnished under sub-section (1);

d) provide for tax period-wise sequential filing of details of outward supplies under sub section (1).

Comments – Time limit to rectify details in GSTR 1 has been extended to 30th November of the following financial year. Two-way communication of match/mismatch as per Sec 42 and 43 has been done away with.

5. Furnishing details of inward supplies (Sec 38 of the CGST Act, 2017) w.e.f. 01-10-2022 - [Clause 104 of Finance Act, 2022]

Section 38 of the CGST Act is substituted for prescribing the manner as well as conditions and restrictions for communication of details of inward supplies and input tax credit to the recipient by means of an auto-generated statement and to do away with two-way communication process in return filing.

Sec 38 shall read as under –

“38. (1) The details of outward supplies furnished by the registered persons under sub-section (1) of section 37 and of such other supplies as may be prescribed, and an autogenerated statement containing the details of input tax credit shall be made available electronically to the recipients of such supplies in such form and manner, within such time, and subject to such conditions and restrictions as may be prescribed.

(2) The auto-generated statement under sub-section (1) shall consist of––

(a) details of inward supplies in respect of which credit of input tax may be available to the recipient; and

(b) details of supplies in respect of which such credit cannot be availed, whether wholly or partly, by the recipient, on account of the details of the said supplies being furnished under sub-section (1) of section 37,–

(i) by any registered person within such period of taking registration as may be prescribed; or

(ii) by any registered person, who has defaulted in payment of tax and where such default has continued for such period as may be prescribed; or

(iii) by any registered person, the output tax payable by whom in accordance with the statement of outward supplies furnished by him under the said subsection during such period, as may be prescribed, exceeds the output tax paid by him during the said period by such limit as may be prescribed; or

(iv) by any registered person who, during such period as may be prescribed, has availed credit of input tax of an amount that exceeds the credit that can be availed by him in accordance with clause (a), by such limit as may be prescribed; or

(v) by any registered person, who has defaulted in discharging his tax liability in accordance with the provisions of sub-section (12) of section 49 subject to such conditions and restrictions as may be prescribed; or

(vi) by such other class of persons as may be prescribed.”

6. Furnishing of Returns (Sec 39 of the CGST Act, 2017) - w.e.f. 01-10-2022 - [Clause 105 of Finance Act, 2022]

Section 39 of the CGST Act is amended to –

a) provide that the non-resident taxable person shall furnish the return for a month by thirteenth day of the following month;

b) provide an option to the persons furnishing return under proviso to sub-section (1), to pay either the self-assessed tax or an amount that may be prescribed;

c) provide for an extended time upto 30th (thirtieth) day of November of the following financial year, for rectification of errors in the return furnished under section 39;

d) provide for furnishing of details of outward supplies of a tax period under subsection (1) of section 37 as a condition for furnishing the return under section 39 for the said tax period (precondition of Filing of GSTR 3B before filing of GSTR 1 for subsequent period/month)

7. Claim of input tax credit and provisional acceptance thereof (Sec 41 of the CGST Act, 2017) - w.e.f. 01-10-2022 -[Clause 106 of Finance Act, 2022]

Section 41 of the CGST Act is substituted so as to do away with the concept of “claim” of eligible input tax credit on a “provisional” basis and to provide for availment of self-assessed input tax credit subject to such conditions and restrictions as may be prescribed

“41. (1) Every registered person shall, subject to such conditions and restrictions as may be prescribed, be entitled to avail the credit of eligible input tax, as self-assessed, in his return and such amount shall be credited to his electronic credit ledger.

(2) The credit of input tax availed by a registered person under sub-section (1) in respect of such supplies of goods or services or both, the tax payable whereon has not been paid by the supplier, shall be reversed along with applicable interest, by the said person in such manner as may be prescribed:

Provided that where the said supplier makes payment of the tax payable in respect of the aforesaid supplies, the said registered person may re-avail the amount of credit reversed by him in such manner as may be prescribed.”.

8. Omission of Sec 42, 43 and 43A of the CGST Act, 2017 - w.e.f. 01-10-2022 - [Clause 107 of Finance Act, 2022]

Sections 42, 43 and 43A of the CGST Act is omitted to do away with two-way communication in return filing.

9. Levy of late fee (Sec 47 of the CGST Act, 2017) w.e.f. 01-10-2022 - [Clause 108 of Finance Act, 2022]

Section 47 of the CGST Act is amended to provide for levy of late fee for delayed filing of return under section 52 (Collection of TCS). Further, reference to section 38 is being removed consequent to the amendment in section 38 of the CGST Act.

10. Goods and services tax practitioners w.e.f. 01-10-2022 - [Clause 109 of Finance Act, 2022]

Consequent to the amendment in section 38 of the CGST Act, sub-section (2) of section 48 of the CGST Act is amended to remove reference to section 38 therefrom

11. Collection of tax at source (Sec 52 of the CGST Act, 2017) - w.e.f. 01-10-2022 - [Clause 112 of Finance Act, 2022]

Sub-section (6) of section 52 of the CGST Act is amended to provide for an extended time upto 30th (thirtieth) day of November of the following financial year for rectification of errors in the statement furnished under sub-section (4).

12. Refund of tax (Sec 54 of the CGST Act, 2017) - w.e.f. 01-10-2022 - [Clause 113 of Finance Act, 2022]

Section 54 of the CGST Act is amended to:

a. explicitly provide that refund claim of any balance in the electronic cash ledger shall be made in such form and manner as may be prescribed;

b. provide the time limit for claiming refund of tax paid on inward supplies of goods or services or both under section 55 (for UIN Holders) as two years from the last day of the quarter in which the said supply was received

(Earlier the period to claim refund was before the expiry of six months from the last day of the quarter in which such supply was received);

c. extend the scope of withholding of or recovery from refunds in respect of all types of refund;

d. provide clarity regarding the relevant date for filing refund claim in respect of supplies made to a Special Economic Zone developer or a Special Economic Zone unit by way of insertion of a new sub-clause (ba) in clause (2) of Explanation thereto.

The Explanation, in clause (2), after sub-clause (b), the following sub-clause shall be inserted, namely-

“(ba) in case of zero-rated supply of goods or services or both to a Special Economic Zone developer or a Special Economic Zone unit where a refund of tax paid is available in respect of such supplies themselves, or as the case may be, the inputs or input services used in such supplies, the due date for furnishing of return under section 39 in respect of such supplies;”.